Publications

“High standards of professional work.” (IFLR1000, 2017)

15.10.2019

Practical tips for ABLV and PNB creditors

On 12 October 2019, an article by Igors Dambrāns, associate at PRIMUS DERLING, providing practical tips for ABLV and PNB creditors was published in the Delfi.lv.

In 2018, the FCMC permitted ABLV Bank AS to implement the voluntary liquidation process, while in late 2019, the insolvency proceedings of AS PNB Banka were opened. Both proceedings mean that both banks have funds frozen, and their disbursement to the creditors of both banks is subject to a regulated procedure and control by the public authorities. There is a risk that the creditor’s claim may not be accepted or recognized by the receiver, so it is important to involve legal service providers in the preparation of the package at an early stage.

A check conducted by the bank may lead bank professionals to suspect that customer accounts have been used for money laundering, terrorist financing or proliferation. In such case, a report should be submitted to the Financial Intelligence Unit that will analyse the information available, and this will result in a freeze until settlement or release of funds. Deadlines are set for such inspection conducted by the Financial Intelligence Unit. The bank may carry out an examination of its funds until it subjectively verifies the correctness of its conclusions. A report of the Financial Intelligence Service confirming the suspicion of money laundering is forwarded to the State Police, which is competent to initiate criminal proceedings and seize previously frozen funds. Investigation during which funds are seized may take up to 2 years, but in practice it will take even longer.  The first step is a check conducted by the bank. Banks, when conducting customer due diligence, identify information and documents that are required.

As a second step, if the issue of the freezing of funds has already been brought to the Financial Intelligence Unit, it is advisable to take the initiative and provide the Unit with the documents submitted to the bank as well as additional information.

Currently, the law requires a person to provide details of the origin of funds within 45 days of seizure; failing that, the person will be denied compensation for the harm he or she has suffered as a result of seizure under criminal proceedings.

Evidence to be provided to the police includes contracts, invoices, accompanying documents, customer statements on goods and services received, testimonies from public authorities, employees and officials, which may also be in writing. Criminal proceedings that assess whether or not any money laundering has taken place can lead to a person being held criminally liable.

The full version of the article in Latvian is available at Delfi.lv